Estate Planning Trends You Should Consider

Following several changes to tax laws, people interested in planning for the future have begun creating estate plans that take advantage of these new regulations. There are some other new strategies that people interested in estate planning began to utilize in 2019. The following will review some of the most popular estate planning trends that you should consider in 2019.

Increased Use of No-Contest Clauses

2019 saw an increase in the frequency of estate litigation. Several cases concerned the validity of no-contest clauses, which are used during estate planning process to prevent any challenges to a person’s estate plans. Several of these cases have demonstrated that poorly written or boilerplate no-contest clauses are often deemed invalid by the court. It is important to include these well-written and carefully considered provisions in your estate plans if there is a good reason to do so. 

By avoiding boilerplate language and instead creating personally tailored statements to express your estate planning goals, you can greatly increase the chances no-contest clause will be found valid and future estate planning arguments will be avoided. An estate planning lawyer’s help can be invaluable in creating these personal statements.

The Use of Revocation on Divorce Statutes

In the 2018 United States Supreme Court case of Sveen v. Melin, the Supreme Court considered the issue of whether a revocation-on-divorce statute can operate retroactively. Minnesota law had provided that the dissolution or annulment of a marriage revokes any revocable beneficiary designation made to a former spouse. The statute also stated that if one spouse made the other spouse a beneficiary of a life insurance policy, their divorce automatically revokes that designation. 

Following this case, estate planners should understand that, given California’s revocation on divorce statute, they should make sure to adequately update estate planning documents as well as beneficiary designations following the termination of a marriage. 

Utilizing Form 706

In addition to the Tax Cuts and Jobs Act, charitable deductions also play an important role in reducing taxes for higher-net-worth clients. A 2019 case demonstrates the numerous complications that can arise during the estate distribution process if charitable deductions are handled improperly. In the 2019 case of Dieringer v. Commissioner, an estate executor was determined to have overstated the amount of charitable deductions when completing Form 706. The deduction amount was based on the value of estate property at the time of the decedent’s death, which was less than what was received by the charity. The executor argued that the tax court should have considered events that occurred after the decedent’s death when arriving at the value of the charitable deduction. 

The tax court, however, found no evidence of any events that would have resulted in a significant decrease in the value of the property that was donated. As a result, the court upheld the reduction of the amount of the charitable deduction and assessment of a tax deficiency. In consideration of this case, it is important to understand that even though it can be tempting to claim the highest possible deduction, it is still vital to follow regulations that have been established by the Internal Revenue Service.

Increased Longevity Requires More Detailed Estate Planning

The Social Security Administration reports that the average life expectancy of a person reaching the age of 65 today is 84.3%, while the odds a woman reaches the age of 65 is 86.7%. The global life expectancy for individuals born in 2007 is the surprising age of 103. These increases life expectancies mean that several additional and more detailed estate planning strategies must be utilized. 

One of the best ways to apply these changes is to have conversations with your loved ones and discuss your estate planning goals. Doing so avoids the stress and uncertainty of trying to create a plan later on in your life. 

More Estate Plans that Consider Second Marriages

The financial implications of getting divorced later on in your life can lead to additional estate planning considerations. One of these challenges involves making sure that you leave an ample amount for your children as well as your future spouse. Many estate planning techniques can be utilized to achieve these goals including life insurance and other financial products, which can leave an amount to a range of beneficiaries. 

One common current trend is for both spouses to become equally engaged in financial planning. If you plan on entering a second marriage, an experienced estate planning lawyer can discuss some of the best options to make sure that your estate planning goals and range of beneficiaries receive adequate care. 

New Financial Technology

As technology improves, it plays new roles in our lives and increasingly helps us to achieve various other complex estate planning tasks. For example, technology has enabled many people to access real-time investment data as well as various other things that were once not possible. As people live longer and our lives become more complex, technology has played a powerful role in managing our assets.

Opportunity Zone Investing

The Tax Cuts and Jobs Act introduced several changes to tax laws that substantially changed financial planning and how to plan to pass on assets to loved ones. One overlooked area of these changes is the Opportunity Act, which introduced Opportunity Zone investment, established to financially rejuvenate distressed areas. 

This act offers substantial tax savings to investors who meet requirements that were created to benefit economically distressed communities. Interest in the program is substantial and the program’s terms can be used to either defer or eliminate the taxation of capital gains on qualifying real estate investments. It is worth considering whether opportunity zone investing has the potential to play a powerful role in your estate plans.

Using an Estate Planning Team

Establishing a team of estate planners is being used by an increasing number of people while estate planning. Utilizing a team-based method helps to identify the various concerns that might arise with your estate plan. It is important to remember, however, that estate planning is not a once and done process. A recurring theme throughout this article is that we all lead increasingly more chaotic lives. 

As a result, it is a wise idea to routinely meet with your team as well as to get together after any substantial life events occur, such as a birth, death, or divorce, to make sure that your estate plan still achieves your ultimate goals.

Purchasing Life Insurance

A growing number of people are realizing that life insurance can be used to offset the various costs that might arise in the event a catastrophic an accident occurs. Life insurance can also act as powerful protection against the various risks that might arise with other types of estate plans. This insurance can also be used in anticipation of increased life expectancies. 

If you are interested in reducing estate planning risks, it is a wise idea to consider purchasing life insurance.

Increased Complexities

Formalities in estate planning are important, but as new laws and regulations are introduced, it is more important than ever to make sure that your estate planning documents satisfy all requirements. In many cases, this means that the assistance of an estate planning lawyer who can make sure that everything is squared away is essential. In addition to changing regulations, another reason why estate plans are becoming more complex is that more people are choosing to use more nuanced and detailed estate plans. 

For example, a person might use trusts to own underlying assets. Or, a person who plans on getting married might use a trust to hold assets. If you do choose to use any of these complex estate planning strategies, it is critical to make sure that your plans are periodically reviewed with the help of an estate planning attorney, or else undesirable consequences can result.

The Role of Institutional Trustees

Trusts have long played an invaluable role in many people’s estate plans, but a growing number of people are realizing that institutional trustees can play a powerful role in achieving their estate planning goals, as well. While institutional trustees charge money, they are professionals. This means that institutional trustees can perform several invaluable tasks like maintaining records and making sure that policies are followed. 

Another trust trend is that while it is often easier to establish a trust in a person’s home state, a growing number of people are choosing to create trusts in states that have the most friendly trust laws. As a result, these individuals are capable of reducing the law and tax complications associated with trust administration. 

Speak with an Experienced Estate Planning Lawyer

In addition to these various trends, a free initial consultation with attorney Melanie Tavare can also introduce a variety of strategies that will play a powerful role in your estate plan. Contact us today for assistance.